If you happen to’re ready for used automobile costs to drop, and studying latest indications as an indication the pricing decline already has begun, one of many greatest sellers of used automobiles within the U.S. says you shouldn’t get too excited.

The rise in used automobile costs will seemingly not decelerate till producers can begin producing automobiles at pre-pandemic charges, in line with the CEO of Carvana.

“[Used car sales] quantity is fairly per 2019, it hasn’t modified that a lot — what’s materially totally different is simply that there are such a lot of fewer new automobiles being manufactured and that is pushing costs up.” Ernie Garcia, Carvana chief govt officer, stated on CNBC’s “Squawk Field” on Friday. “I feel till the provision chains on the [original equipment manufacturers] get figured on the market’s prone to be some lasting impression.”

Automotive producers have struggled to maintain up manufacturing with the scarcity in semiconductor chips.

Ford, which needed to minimize its North American automobile manufacturing in July and August as a consequence of shortages, stated its second quarter earnings report that provides have been bettering however that it misplaced manufacturing of about 700,000 autos throughout the quarter.

Common Motors stated the chip scarcity will minimize its earnings by $1.5 billion to $2 billion and has been idling a few of its North American meeting crops because of the scarcity.

Nissan stated in Might that it anticipated to make half one million fewer autos this 12 months, whereas BMW just lately warned that it expects the shortages to creep into 2021.

In whole, the chip scarcity is estimated to value automakers $110 billion in misplaced income this 12 months, in line with a Might report from consulting agency AlixPartners.

The dip in manufacturing has been a boon for used automobile retailers like Carvana. The corporate reported its first worthwhile quarter Friday, bringing in $45 million of internet revenue throughout Q2 2021. Carvana’s whole income additionally grew 198% year-over-year to $3.3 billion because it delivered greater than 107,000 automobiles, a 96% improve in comparison with a 12 months in the past and the primary time in its eight-year historical past it has ever bought over 100,000 automobiles in 1 / 4. Carvana shares have risen 44% this 12 months by means of Friday.

These good points have come alongside a big bounce in used automobile costs. The common transaction worth for a used automobile was $25,410 within the second quarter of 2021, up from $22,977 within the first quarter and 21% year-over-year, in line with information from on-line automotive useful resource Edmunds. That determine marks the best common worth over 1 / 4 for a used automobile that Edmunds has ever tracked.

These excessive costs have helped gas the used automobile business.

EchoPark Automotive, a division of Sonic Automotive that sells pre-owned autos, additionally set a document for quarterly earnings with $595.6 million in income, up 88.9% year-over-year. Retail gross sales quantity was up 68.9% year-over-year.

CarMax, the biggest used-car vendor within the U.S., had a 138.4% improve in income year-over-year in its 2022 fiscal first quarter ending Might 31, to $7.7 billion. The corporate stated it bought 452,188 models by means of its retail and wholesale channels throughout the quarter, up 128% from the earlier 12 months.

As for when costs might stage off, Garcia stated “over the following six months and even 12 months I feel it is exhausting to say.”

“What we’re discovering out is that the OEMs have provide chains which are perhaps a little bit extra fragile than all of us want and so they’ve acquired hundreds of elements being manufactured globally and there is Covid waves popping up in numerous elements of the world so I feel that makes it actually exhausting to foretell when that can normalize once more,” he stated.

As compared, Sonic Automotive president Jeff Dyke just lately stated on CNBC’s ”Worldwide Trade” that he expects the chip scarcity to alleviate within the coming months, which might begin to decrease the value of used automobiles.

“New automobile inventories are going to get higher progressively over the following few months as we get to the tip of the 12 months,” Dyke stated. “As that occurs, it’ll alleviate the quantity of stock points occurring on the pre-owned facet.”